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A Big GOP Tax Loophole Winner: Donald Trump

Kevin Lamarque

By Michael Rainey

December 6, 2017

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Commercial real estate is one of the clear winners in the Republican tax plan, according to The New York Times: “House and Senate Republicans, in their divergent bills, both offered steeply reduced rates to corporate giants, partnerships and family-owned firms across the board. But when it came time to eliminate special breaks or impose tighter standards, real estate was generally excused from the room.”

Coincidentally or not, President Trump and his family stand to gain considerably from the new rules. Real estate investors will be able to use a more favorable depreciation schedule on their properties, and rental income will be taxed at a lower rate.

Real estate investment trusts also do exceptionally well in the bill, and the Trump Organization has substantial deals with several REITS, including Vornado Realty Trust in New York. Income from REIT investments will be taxed at the new, lower pass-through rate, giving Trump big savings while creating what tax lawyer Steven M. Rosenthal called “giant new tax shelters” for investors.

Those and other loopholes are raising plenty of eyebrows, both in shock and in eager anticipation. Rather than simplifying the tax code, the Republican plan seems to be creating more nooks and crannies that can be exploited by clever tax layers.

Adam Looney of the Brookings Institution told the Times, “Suddenly, there are a dozen different tax rates that apply to different businesses, in different industries, and to different investments.” Experts expect to see a wave of restructurings and asset shifting as businesses and wealthy investors maneuver to take advantage of every new tax break in the code.